Growth in data centre activity will add to water security challenges across Australia and other countries in coming years, a new report has warned.

Published by international business improvement and standards consultancy BSI and UK based water efficiency advocacy group Waterwise, the report warns that without action, the expansion of data centres will pose a threat to global water security.

In their report, the two organisations have analysed data centre growth and its likely impact upon water security across nine countries. These include Australia, China, France, Germany, India, Japan, the Netherlands, the United Kingdom and the United States.

Based on BSI and Waterwise’s Global Water Security and Solutions Indicator, the report compares global data center capacity and forward ambitions with water security levels.

It also reviews current policies and legislation which are aimed at addressing sustainability and water security challenges which relate to data centre expansion.

Across the nine countries, the report found that most have both ambitious data centre expansion plans and moderate to severe water security challenges.

Furthermore, it found that in several of the countries, action to address challenges falls short of that which is needed.

In particular, the report found that:

• Of the nine countries studied, only one (France) had low levels of water insecurity and was making encouraging progress toward solutions.
• A further four counties have average levels of water insecurity and are making moderate progress toward solutions: Australia, the Netherlands, the UK and Germany.
• Finally, four countries have high water insecurity and are making poor progress or inadequate progress toward solutions. These are the United States, China, India and Japan.

Energy and water concerns

The latest report comes amid growing concern about the impact which rapid data centre expansion is expected to have upon energy grids and water supply across many countries.

Within data centres, thousands of servers as well as equipment run non-stop for 24 hours per day, performing tasks ranging from basic search queries to sophisticated AI related functions.

From a water perspective, this requires significant usage in terms of:

• Indirect water consumption, which arises from the massive energy requirement which is needed for data centre operations and the associated water use in energy production; and
• Direct water consumption as the servers generate an enormous amount of heat and need to be cooled in order to prevent damage.

The effect could be significant.

According to Statista.com, the global data centre market (already valued at $527 billion) is projected to nearly double by 2030.

This is happening as data centres are already among the top ten water-consuming commercial industries in the world.

A single 1MW data facility can use over 25 million liters of water annually for cooling. That is enough to supply drinking water to more than 400 people for a year.

Meanwhile, a medium sized 15MW facility uses as much water annually as three average-sized hospitals or two golf courses.

All of this has prompted calls for data centres to minimise their water impact (as well as their energy impact).

During a recent interview with Sourceable, Professor Priya Rajagopalan, Director of the Post Carbon Research Centre for Infrastructure and the Built Environment at the Royal Melbourne Institute of Technology (RMIT), described several opportunities in this area.

Possible examples include using water-efficient cooling systems, feeding excess data centre backup power generation back into the energy grid; onsite rainwater capture, treatment and reuse; and water saving measures such as locating data centres close to sewers to enable use of recycled water for data centre operations.

At a broader level, calls are growing for coordinated policy and industry action.

This should be led by government and should also include the technology industry, the design and planning profession, energy and water utilities and research and academia.

Action insufficient

As mentioned above, the aforementioned report found that several countries have ambitious plans for data centre expansion but do not yet have adequate policies in place to manage the impact of these in terms of water security challenges.

In some countries, challenges are moderate and efforts have gone some way to addressing concerns.

Australia currently achieves a water security and solutions score of 39/85 (lower scores are better). This means that the country has average levels of water insecurity and is making moderate progress toward solutions.

The nation currently has 314 data centres (according to Statista.com) and is expected to almost triple the value of its data centre sector from $1.72 billion as at the end of 2024 to $4.98 billion by 2030.

From an energy viewpoint, the Federal Government has been relatively proactive.

Since 1 July last year, all data centres which host federal government workloads have needed to achieve 5-star energy efficiency ratings under the National Australian Built Environment Rating System (NABERS).

The government has also taken steps to introduce conditions that all data center providers for the government comply with greenhouse gas emission thresholds, use accredited renewable energy and aim for a Power Usage Effectiveness of less than 1.4.

Whilst these requirements relate to energy, they may also go some way to addressing water impacts by reducing the volume of water that is used to generate energy for data centre consumption.

With regard to direct water use, there are no specific rules or requirements which pertain to data centres in particular.

Instead, water use is governed by general policies which relate to overall planning regulations.

These require all data centre projects to obtain consent to connect to the relevant water authority’s existing infrastructure and to comply with state or municipality general water policies and planning regulations.

Whilst these rules have their place, the report suggests that more specific measures may be needed in light of the water intensity of data centre operations.

Turning to the United States, the country has a concerning water security and solutions score of 53/89.

This means that it has high water security challenges and is not making adequate progress towards solutions.

With more than 5,400 active data centres, the country is the world leader in data centre activity.

With the Trump administration having put AI at the centre of its strategy, the county is pursuing an aggressive policy of data centre construction.

The nation’s AI Action Plan includes over 90 recommended initiatives which aim to facilitate rapid data centre expansion.

As this is happening, however, there is little effort at the federal level to guarantee protection of either the environment or water security.

Indeed, whilst the above report makes several recommendations which involve reform of environmental regulations, these proposals are primarily geared toward facilitating new data centre development.

They include creating new categorical exclusions for routine data center related construction, creation of a nationwide permit to remove preconstruction delays, streamlining or reducing regulations for environmental related permits and directing agencies with significant federal lands available to identify sites suited for large-scale construction of data centers.

While the plan did not provide steps to achieve these recommendations, an Executive Order has been issued directing agencies to fast-track environmental permitting under laws such as the Clean Water Act, the Clean Air Act and the National Environmental Policy Act.

Moving down to the state level, however, several individual jurisdictions are considering or introducing measures to either improve water efficiency or respond to water security risk.

In California, the state is proposing tax incentives to encourage data centres to adopt water efficient cooling systems.

In Texas, meanwhile, the state plans to allocate billions towards water infrastructure in response to reports that data centers will account for approximately 6.6 percent of the state’s total water use by 2030.

Finally, China’s water security and solutions score comes in at a worrying 50/85. This means that the country has high water insecurity and has made limited progress toward solutions.

According to the report, the country is experiencing significant growth in data center capacity.

This is being driven by increasing digital services and data storage needs as well as the rollout of 5G networks and regulation.

In contrast to the US, however, the Chinese Government is taking some action to address environmental impact and water security issues.

Launched in 2022, for example, the Eastern Data and Western Computing project aims to support continued growth of the data center sector by developing computing hubs and data centre clusters in the country’s Western regions.

This is important as the Western regions have lower population densities as well as smaller industrial and business penetrations yet have ample land and access to resources. This includes renewable energy from wind, solar, and hydroelectric power, which can be used for cooling.

The central government hopes that developing data centres in the west will help to alleviate pressures within the country’s highly populated and highly industrialised eastern and southern regions which have the greatest demand for network processing and storage.

In addition, the Chinese government does appear to be implementing direct measures around environmental sustainability, energy efficiency and water efficiency.

In cities such as Beijing, Ningxia and Gansu, water efficiency standards for data center projects are increasing.

These typically involve requirements to utilise advanced cooling methods that reduce water consumption along with the phasing out of water and energy inefficient data centers.

(Image from BSI and Waterwise report)

Leadership and collaboration needed

Murray Sayce, Global Head of Assurance Sustainability Solutions at BSI, says that the report highlights the need for action.

“Data centers are critical to digital life and taking advantage of the opportunity presented by AI in particular,” Sayce said.

“But their growth must not come at the expense of water security.

“Our analysis of the nine countries points to a concerning picture that, currently, national sustainability policies and regulations relating to the environmental impact of data centres is limited.

“Technology is becoming ever more central to our lives, so now is the moment for international collaboration to embed sustainable practices into data centre development and operation.

“International standards and independent assurance schemes provide a foundation for this and we are very keen to work in partnership with business to support a more sustainable approach.”

Nicci Russell, CEO of Waterwise, agrees.

“Nothing happens without water.,” Russell said.

“This report by BSI underscores the urgent need for governments and industry to integrate water efficiency into data center planning.

“Ultimately, building a water-secure future requires a concerted effort. Collaboration between government departments, regulators and industry stakeholders is essential to model water needs, mitigate risks and ensure that the vital growth of the data centre sector aligns with global water security goals.

“Without action, the AI revolution could exacerbate global water scarcity.”

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